It’s Friday! After a week that was a bit of a losing streak for markets – the TSX declined against yesterday by almost 60 points – let’s keep it short, and move onto the fun stuff (whether or not you should live-streaming your life on the Internet, see below.)
Yesterday was a busy day for Canada, with the Bank of Canada governor visiting the U.K. and budgets from both Quebec and Alberta, but today’s big story is a somewhat grudging lookahead to BlackBerry’s profits. Who knows, maybe this could turn into a positive story.
Fed chair Janet Yellen is in San Francisco today to speak about a “new normal” for monetary policy, and there are some important numbers out today, including U.S. fourth-quarter GDP, and consumer confidence. Brazil’s GDP will also be released today – as the country is being rocked by a corruption investigation and skyrocketing inflation – and this morning, Japan released their latest inflation numbers. So-called “Abenomics” – the anti-deflation plan by Japanese leader Shinzo Abe – was dealt a blow by figures that saw core CPI (which cuts out more volatile factors) hitting zero. Ouch.
Conflict in Yemen has also been pushing oil prices up over worries that it could threaten a transit choke point and further hobble OPEC relations, but while oil is still above $50, it’s dropped by two per cent already this morning. Greece will also get a rating update this morning, so keep your eyes peeled for any changes there.
What should you expect from BlackBerry today? Disappointment. It’s a harsh world out there for the mobile company – which is in the midst of CEO John Chen’s supposed turnaround – and expect the fall to continue today, as BlackBerry announces its fourth-quarter earnings. The company’s plan is a long-running pivot from making devices – the latest aren’t selling – to software, which can be used on other smartphones, as well as upgrades for services including protected messaging. But it’s not clear how paid take-up of those services will be, and the last-quarter earnings showed the company missing expectations, with a $148-million loss. Since the beginning of the year, share prices have fallen by about 12 per cent. Nonetheless, Chen has pledged to launch four new devices this year that BlackBerry hopes could restore interest.
Poloz goes to London. The governor of the Bank of Canada was in the U.K. yesterday, where he defended the Bank’s surprise rate cut in January to 0.75 per cent – and then leaving the cut steady in this past month’s meeting – as “insurance.” Poloz said the cut has been working as planned and has bought the Bank time to see how oil prices and a global slowdown will play out – but in a press conference afterwards, he added that he sees export-led growth perking up the economy in the second half of the year. He was on familiar ground for Canadian central bankers – the Bank of England, headed by former governor Mark Carney, was just blocks away – and Carney, too, gave a speech on his first visit to London (in 2008) about putting trust in central banks. I was there, and you can read more about it here. Poloz also briefly addressed the Canadian housing market, which he said remains our “key vulnerability,” but is highly concentrated in certain regions, including Alberta.
The ballad of Alberta and Quebec. The topsy-turvy budget sensation continues, as Alberta announced they were facing a $5-billion deficit and would begin a series of tax hikes, and Quebec came up with a balanced budget, holding taxes steady. For Albertans, the oil rout has had sudden and dramatic consequences, leaving a massive hole in a budget that, just months ago, was projected to be in surplus. Premier Jim Prentice announced a series of taxes on alcohol, cigarettes and fuel, as well as implementing progressive taxing for incomes above $100,000. The deficit, the largest in Alberta history, will be partly made up by $4 billion out of a contingency fund, but the province has not put away substantial amounts of energy revenue in a heritage fund since the 1970s. Health and education will also see cutbacks, although the government said job losses would mainly be in unfilled vacancies instead of layoffs, and there is also a new health care levy.
In Quebec, while the budget avoided a deficit, however, the current balance won’t be maintained without pain – including a 1.4 per cent cut to health and social services, and a 0.2 increase to education (which doesn’t make up for inflation.) A health tax was also slated to be cut, and the plan is to reduce debt-to-GDP to 54 per cent by this time next year.
The next generation of selfies. Tired of just taking pictures of yourself? How about live-streaming every moment of your day, instead? That’s the premise – at least at it’s most basic – for a spate of live-streaming apps, including Periscope, which was recently acquired by Twitter, and Meerkat, which gained popularity at the latest South by Southwest. The apps offer a chance for “live broadcasting,” and while this could include the painfully banal – you, walking your dog, eating soup – it also been picked up by celebrities to connect with fans, with other ramifications for news and reporting, presentations, conferences (and yes, pornography). The idea of live-streaming is far from new, but a spate of similar apps have tried (and largely failed) to capitalize on the idea in the past. What’s changed now? Better technology, better cameras, better data and – perhaps most of all – a growing comfort with broadcasting our every thought and emotion on the Internet.
Big read: The Deadly Global War for Sand. We talk about oil, water, minerals, trees. But the demand for sand – largely to produce towers of cement in the world’s biggest construction booms in Asia and the Middle East – are making beaches, and even whole islands, disappear. Wired has this story on the global sand trade, a business which uses 40 billion tons of sand and gravel a year and which has seen Australia sell sand to the Middle East. They take this tale of environmental disaster and organized crime intrigue to India, where the “sand mafia” are behind hundreds of deaths.
Need to know:
TSX: 14,869.80 (-59.57), Thursday
Loonie: 80.90 (+0.30), Thursday
Oil (WTI): $50.40, Friday (7 a.m.)